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THE NOT-SO-SECRET HISTORY OF CAPITALISM

This is a coda to my review of Paul Collier’s book Exodus. In Exodus, Collier makes a case for restrictions on immigration, from the perspective both of the countries of origin and of the host countries to which they migrate. In my review I questioned the moral and social arguments that Collier employs to justify his arguments, and suggested that ‘there is often a chasm between that evidence and Collier’s more contentious arguments’, while many of his policy prescriptions ‘are morally questionable’.

There is an important aspect of Collier’s argument that I did not address in my review – his ideas about what leads to global inequality, and hence drives people to migrate. These ideas form a thread throughout the book and undergird the arguments about migration. They are, in many ways, even more dubious and debatable than his claims about migration.

The ‘primary cause of the poverty’ of most countries in Africa and Asia, Collier suggests, rests with their ‘cultures – or norms and narratives’ and ‘their institutions and organizations’. Rich countries are rich because they have better ‘narratives’, that is, they tell themselves better stories about what makes a good society. This in turn allows them to adopt more enlightened norms and create more stable institutions. Collier lays out an ‘influential line of argument’ according to which the historical roots of prosperity lie in an ‘efficient tax system’ which in turn

gives a government an interest enlarging the economy, and so induces it to build a rule of law. The rule of law induces people to invest, confident that productive assets will not be expropriated. Investment drives growth…. Protest from the many excluded forces the rich to commit to inclusive political institutions: we arrive at property-driving democracy.

Not just formal institutions but informal social norms, too, distinguish rich and poor countries. In rich countries, unlike in poor countries, most people have renounced the use of violence and are more willing to cooperate, a willingness expressed in ‘mutual regard’, the readiness to help each other out and to redistribute resources. ‘The French’, Collier suggests, ‘are more willing to cooperate with each other and to make transfers to other citizens than are Nigerians, and this supports a range of institutions and norms that have enabled France to become richer and more equal than Nigeria’.

For Collier, then, the key difference between rich and poor countries is primarily cultural and normative. If only Mali ‘had a similar social model to France and maintained it for several decades’, he argues, ‘it would have a similar level of income.’ If only it were that simple.

There is, of course, an element of truth to Collier’s argument. Corruption and conflict and poor governance bedevil many, perhaps, most African and Asian nations. But it is also an argument that is inexcusably blind to the broader reasons why rich countries have become rich, and why many poor countries stay poor.

It is true that democratic government, the rule of law, a robust taxation system and a vibrant civil society have been central to Western prosperity. But to suggest that Western nations have become prosperous merely because they have adopted the right norms is to turn history to its head. From the beginnings of the early modern period, there was a conflict between the ideals of liberté, egalité and fraternité and the realities of capitalist society. It was only because Western societies often disregarded those very norms that they were able to accumulate power and resources as they did.

At the birth of capitalism lay not an ‘efficient tax system’ but forced land enclosures, that threw people off the land, and helped create a mass of landless workers that would feed the emerging factory system. As Gerard Winstanley, the leader of the Diggers, asked in his 1649 tract, The New Law of Righteousness:

Was the earth made to preserve a few covetous proud men to live at ease, and for them to bag and barn up the treasures of the Earth from others that these may beg or starve in a fruitful land; or was it made to preserve all her children?

At the beginnings of capitalism lay also slavery, the profits of which provided much of the wealth for early industrial investment. In his groundbreaking 1943 book Capitalism and Slavery, Eric Williams argued that the profits of the ‘triangular trade’ between Europe, Africa and the New World had ‘made an enormous contribution to Britain’s industrial development’.

Williams’ thesis has been fiercely contested, especially by historians and economists who insist that the transition to capitalism was driven primarily by internal, not external, factors. More recent research suggests, however, that Williams was right in the broad lines of his argument. In his superb The Making of New World Slavery (part of a monumental trilogy with The Overthrow of Colonial Slavery and The American Crucible), the historian Robin Blackburn shows the importance of slavery and the slave trade as providing a launchpad for early capitalism.

Closely scrutinizing figures for a single year, 1770, Blackburn suggests that triangular trade profits may have provided anything between 20.9% and 55% of Britain’s gross fixed capital formation. In that year total investments in the domestic British economy stood at £4 million, (or about £500 million in today’s money). That same year, slave-based planting and commercial profits came to £3.8 million. Profits from the slave trade and from the plantations helped to fund all manner of projects from ‘endow All Souls College, Oxford, with a splendid library, to build a score of banks, including Barclays, and to finance the experiments of James Watt, inventor of the first really efficient steam engine’. Merchant bankers were able to invest in the cotton industry, in metal manufacturing, in the building of roads and canals, and wharves and harbours, and shipbuilding. Of course, Blackburn observes, ‘profits [from slavery] were not all reinvested, but they did furnish a convenient pool of resources available for this purpose’.

Meanwhile the working class at home was forced into conditions of abject misery. Friedrich Engels, son of a textile manufacturer who owned factories in Manchester, painted a devastating picture of urban life in the mid-nineteenth century in his 1844 book The Condition of the Working Class in England. Here is his description of ‘Little Ireland’, a Manchester slum:

The cottages are old, dirty, and of the smallest sort, the streets uneven, fallen into ruts and in part without drains or pavement; masses of refuse, offal and sickening filth lie among standing pools in all directions; the atmosphere is poisoned by the effluvia from these, and laden and darkened by the smoke of a dozen tall factory chimneys. A horde of ragged women and children swarm about here, as filthy as the swine that thrive upon the garbage heaps and in the puddles…The race that lives in these ruinous cottages, behind broken windows, mended with oilskin, sprung doors, and rotten doorposts, or in dark, wet cellars, in measureless filth and stench, in this atmosphere penned in as if with a purpose, this race must really have reached the lowest stage of humanity. This is the impression and the line of thought which the exterior of this district forces upon the beholder. But what must one think when he hears that in each of these pens, containing at most two rooms, a garret and perhaps a cellar, on the average twenty human beings live; that in the whole region, for each one hundred and twenty persons, one usually inaccessible privy is provided; and that in spite of all the preachings of the physicians, in spite of the excitement into which the cholera epidemic plunged the sanitary police by reason of the condition of Little Ireland, in spite of everything, in this year of grace 1844, it is in almost the same state as in 1831!

This, remember, was not at the origins of industrialization, but in the middle of the nineteenth century. This was the age of Isambard Kingdom Brunel and Baron Hausmann, of the Eiffel Tower and the Crystal Palace, of railways and sewage systems, of pasteurisation and the anaesthetic. It was also the age of the urban slum and the ‘dark satanic mills’, of the cholera epidemic and the workhouse, of the Peterloo Massacre and the Chartist rebellion. The price of capitalist development had been brutal repression and almost unimaginable immiseration.

As for ‘mutual regard’ being central to prosperity, it is easy to forget how deeply entrenched racism was in the Western consciousness until recently. ‘The brown, black and yellow races of the world’, the London Times insisted in an editorial in 1910, had to accept that ‘inequality is inevitable’ thanks to the ‘facts of race’. The consequences of such inequality had already been made starkly clear two decades earlier by the soon-to-be US President Theodore Roosevelt in his four-volume history The Winning of the West. ‘All must appreciate’, he wrote, the ‘race importance’ of the struggle between whites and the rest; the elimination of the inferior races, ‘whose life was but a few degrees less meaningless, squalid and ferocious than that of the wild beasts’ would be ‘for the benefit of civilization and in the interests of mankind’, adding that it was ‘idle to apply to savages the rules of international morality that apply between stable and cultured communities’.

The development of colonial empires, the carving up of the rest of the world by a handful of Western nations, allowed for cheap raw materials and labour, the creation of huge markets for goods, and the ability to control global trade and development. It also reinforced the sense of the moral worthlessness of the Other. Europeans, as Frantz Fanon acidly observed in The Wretched of the Earth, ‘are never done talking of Man, yet murder men everywhere they find them, at the corner of every one of their own streets, in all the corners of the globe.’

Racial contempt was directed not simply towards the peoples of Africa and Asia but towards the working class as home too. ‘The lowest strata of European societies’, the French psychologist Gustav Lebon wrote, ‘is homologous with the primitive men.’ Francis Galton, the founder of eugenics, believed that ‘beside… three points of difference – endurance of steady labour, tameness of disposition and prolonged development – I know of none that very markedly distinguishes the nature of the lower classes of civilized man from that of the barbarians’. In an address to the Medico-Psychological Society of Paris in 1857, the Christian socialist Phillipe Buchez considered the meaning of social differentiation within France:

Consider a population like ours, placed in the most favourable circumstances; possessed of a powerful civilisation; amongst the highest ranking nations in science, the arts and industry. Our task now, I maintain, is to find out how it can happen that within a population such as ours, races may form – not merely one but several races – so miserable, inferior and bastardised that they may be classes below the most inferior savage races, for their inferiority is sometimes beyond cure.

Victorian England, too, viewed the urban working class and the rural poor as the racial Other. A vignette of working class life in the Saturday Review, a well-read liberal magazine of the era, is typical of English middle class attitudes of this era:

The Bethnal Green poor… are a caste apart, a race of whom we know nothing, whose lives are of quite different complexion from ours, persons with whom we have no point of contact. And although there is not yet quite the same separation of classes or castes in the country, yet the great mass of the agricultural poor are divided from the educated and the comfortable, from squires and parsons and tradesmen, by a barrier which custom has forged through long centuries, and which only very exceptional circumstances ever beat down, and then only for an instant. The slaves are separated from the whites by more glaring… marks of distinction; but still distinctions and separations, like those of English classes which always endure, which last from the cradle to the grave, which prevent anything like association or companionship, produce a general effect on the life of the extreme poor, and subject them to isolation, which offer a very fair parallel to the separation of the slaves from the whites.

The West became prosperous, in other words, despite ignoring enlightened values, not merely by pursuing them. Prosperity in turn allowed Western nations to establish progressive social institutions and liberal norms. It was not, however, merely prosperity but social struggle that allowed, or rather forced, Western nations to establish such institutions and such norms, both working class struggles at home and anti-imperialist struggles abroad; social struggles, in other words, many of which were led by the very people that Collier now deems not to possess the right cultural attributes or moral norms.

European nations, and America, developed at a time when the field was relatively empty. They were able to create markets, develop their economies, expand their influence, flex their power, build an empire at a time when the only competition came from a handful of other similarly developing Western nations. Today’s developing countries find themselves in a global economy already carved up and one in which the richer nations are able to exploit their political economic and military power to ensure that their interests take precedence. Those interests often require global trade to be distorted and the economic development of poorer nations warped. They also often require the political and social institutions of non-Western nations to be corrupted. Western leaders may proclaim the virtues of democracy and liberalism. There is, however, a long history of Western nations propping up dictators who suit their needs, and undermining democracy and the democratic movements that they fear might challenge their interests.

So, yes, let us by all means talk of the cultural and moral deficits faced by poor nations. Let us talk of the corruption and social fragmentation and political repression and poor governance. These are all important issues and, from Argentina to Zimbabwe, from Nigeria to India, the political elites must be challenged and held to account, the movements for democracy and radical social change supported. But let us not also forget the context of global inequality, nor the history of capitalism, nor the backstory to how rich countries became rich, nor the struggle it has taken to establish progressive social norms. That history is no secret. But it is one that is all too often forgotten.

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The images are, from top down, painting of Ohio’s industrial pollution from the Dayton Business Journal (artist unknown); ‘Poverty’ by Picasso; poster of slave stowage on the slave ship Brookes, produced in 1788 by the Plymouth Chapter of the Society for Effecting the Abolition of the Slave Trade; Gustav Dore’s 1872 engraving of Orange Court, Drury Lane, London; and Lewis Hine’s photo of girls working in an American cotton mill, 1911. The cover image is of a migrant worker on California highway, circa 1935; the picture is from the Franklin D. Roosevelt Library, courtesy of the National Archives and Records Administration.

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9 comments

bruce madeiros

Kenan

Interesting article regarding the birth of capitalism in the West and slavery. I am reminded that in 1776 Americans proclaimed all men and women are free and yet about 25 years later President Jefferson reneged on that position in the constitution and agree to have more “slave” states because he considered that slaves were essential for the American cotton industry et al !
I remember Christopher Hitchens saying a few years ago that he had to recognise that when his hero, Jefferson, introduced these additional “slave” states he made the slaves states more powerful which effectively created the American Civil War. The irony of the whole thing is that Jefferson politically opposed slavery all his life and yet he owned hundreds of slaves, yet freed only a few.
Regards
Bruce

Thanks, Kenan. A thesis also paralleled in Walter Rodney’s “How Europe Underdeveloped Africa.” Which I got into trouble (with my UK sponsoring agency) for introducing to A-level students in Uganda back in the early 1990s🙂

Yes, I can imagine. It must be about twenty years since I last read Rodney’s book. I am not actually arguing here that Europe underdeveloped Africa – that is a fraught debate, and I have my disagreements with Rodney – or that the lack of development in non-Western countries is merely a product of colonialism. It clearly is not. What I am calling for is a more nuanced debate about what causes global inequalities, less amnesia about the origins and history of capitalism and a more realistic view about the relationship between values and prosperity.

At the core of Capitalism is exploitation for profits and that lead to all the exploitation Mr. Kenan narrated in the article. It was natural to have a push back from the exploited masses and the nations; and that story of struggle is still unfolding in the form of globalization to fight for economic share and human rights.
Despite the exploitation and other flaws, overall the masses has done better, both economically and by human rights measures, under Capitalism than any other system in recent times. Most of the nations, including China and Russia, either has adopted Capitalism or gradually are moving toward it..
Fayyaz

I have no doubt that it is far better living in Britain or America than in Russia or China. This was not meant to be a debate about the merits of capitalism (that is for another essay, another debate, another time…). Still less was I questioning the importance of the transformative character of capitalism. What I am asking for is a more nuanced debate about global inequality and a little less historical amnesia.

Diamond’s point is that it was not racial differences but accidents of geography that have accounted for the success of the West. I agree with that. The trouble is, Diamond views almost everything in terms of external factors, and downplays the role of agency, and of ideas and values.